Institutional Methodology (IM)
"Institutional Methodology (IM)" submitted by SchoolGrantsfor Editorial Team and last updated on Monday 9th January 2012
The term "demonstrated financial need" is typically used to describe an assessment based on Institutional Methodology for undergraduate need-based, institutional funding. The amount that an applicant can be expected to contribute is measured according to standardized formulas. These standardized formulas include the federal and institutional methodologies, and the 568 Consensus Approach.
Federal VS Institutional Methodologies:
The FAFSA provides all the student information necessary to receive federal Pell Grants, federal student loans, and federal campus-based aid. However, some schools collect additional information before awarding their own funds, i.e., institutional student aid. In many cases, colleges and universities use a commercially available supplemental form. This and similar systems are known as institutional methodology (IM), to distinguish them from federal methodology.
- In general, institutional methodology is more comprehensive than federal methodology and assumes that more assets can be used for college expenses. For example, in most cases, institutional methodology considers home equity as an asset that can be used to help finance a college education; federal methodology does not.
- Institutional Methodology (IM) formula used by some colleges to determine your eligibility for institutional aid; may count home equity and other assets the FAFSA does not.
- Parents have an obligation to finance the education of their children, to the extent they are able.
- A family's income and assets produce a comprehensive measure of the family's financial strength and ability to contribute toward educational costs.
- Factors such as family size, extraordinary expenses, age of parents, and other considerations are weighed in relation to income and asset information in order to measure a family's realistic ability to pay for an education.
Institutional Methodology (IM) is the College Board's need-analysis system. Developed by financial aid practitioners and economists, IM provides a comprehensive evaluation of a family's ability to pay for the costs of higher education. Over 600 institutions use IM in conjunction with the CSS/Financial Aid PROFILE to target their need-based funds equitably to the most deserving students.
Choose "Federal Methodology" to calculate your expected family contribution (EFC) and financial need using the Federal Need Analysis Methodology used by the Federal processor and school financial aid administrators. Choose "Institutional Methodology" to get an estimate of your financial need using a formula similar to the one used by many private colleges and universities. IM is instrumental in figuring how the institution will use its own monies (not Federal funds) regarding financial aid for said family.
Not all schools use institutional methodology (IM) to determine eligibility for financial aid. The majority of colleges and universities in this country use only federal methodology (FM). Even within those schools that use IM, there are differences in how institutions use information gathered on the CSS PROFILE. There are also variances in the financial resources that institutions can draw upon when awarding gift aid.
A family's contribution is not something most families can realistically take out of one year's income, and most families finance their share of college costs through a combination of saving, paying out of current income, and borrowing.
In other words, it is a system designed to squeeze even more money from a family with a college-bound or an upper-class student. The logic is simple, it's our money (the schools) and we will hand it out in a manner we seem to befit the individual family's financial aspects. The Federal methodology system (FM) apparently isn't enough for private schools: They wish to extract even more money from the family using the Institutional Methodology system. In reality it is double assessment from two systems that are miles apart in many similar aspects: Essentially it is having your income taxed twice; once by the state, and then by the federal government.
Institutional Methodology (IM) provides:
- An economically sound approach to determining the Expected Family Contribution (EFC) that is based on current financial indicators and up-to-date consumer research and tax policy.
- A realistic assessment of both parent and student income. Paper losses and income adjustments—perfectly legal in the federal tax system—are not considered in the IM definition of income. Although Adjusted Gross Income (AGI) is important, it is not the sole determinant of genuine income strength.
- A comprehensive evaluation of all family assets—including investments, real estate and equity in the home, farm, and business.